UTAH HERITAGE FOUNDATION

Transcription

1 UTAH HERITAGE FOUNDATION dba PRESERVATION UTAH FINANCIAL STATEMENTS AND REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS DECEMBER 31, 2017 AND 2016 Osborne, Robbins & Buhler, PLLC

2 UTAH HERITAGE FOUNDATION dba PRESERVATION UTAH FINANCIAL STATEMENTS AND REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS DECEMBER 31, 2017 AND 2016

3 CONTENTS Page REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS 1 FINANCIAL STATEMENTS STATEMENTS OF FINANCIAL POSITION 4 STATEMENTS OF ACTIVITIES 5 STATEMENTS OF CASH FLOWS 6 NOTES TO FINANCIAL STATEMENTS 7

4 OSBORNE, ROBBINS & BUHLER, P.L.L.C. Certified Public Accountants 4527 SOUTH 2300 EAST, SUITE 201 SALT LAKE CITY, UTAH PHONE: FAX: REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS Board of Trustees We have audited the accompanying financial statements of dba Preservation Utah (the Foundation), a nonprofit organization, which comprise the statements of financial position as of December 31, 2017 and 2016, and the related statements of activities and cash flows for the years then ended, and the related notes to the financial statements. Management s Responsibility for the Financial Statements Management is responsible for the preparation and fair presentation of these financial statements in accordance with accounting principles generally accepted in the United States of America; this includes the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to error or fraud. Auditor s Responsibility Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor s judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity s internal control. Accordingly, we express no such opinion. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion. Opinion In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of as of December 31, 2017 and 2016 and the changes in its net assets and its cash flows for the years then ended, in accordance with accounting principles generally accepted in the United States of America. 1

5 Other Reporting Required by Government Auditing Standards In accordance with Government Auditing Standards, we have also issued our report dated April 17, 2018, on our consideration of the Foundation s internal control over financial reporting and on our tests of its compliance with certain provisions of laws, regulations, contracts and grant agreements and other matters. The purpose of that report is solely to describe the scope of our testing of internal control over financial reporting and compliance and the results of that testing and not to provide an opinion on the effectiveness of the Foundation s internal control over financial reporting or on compliance. That report is an integral part of an audit performed in accordance with Government Auditing Standards in considering the Foundation s internal control over financial reporting and compliance. April 17,

6 FINANCIAL STATEMENTS

7 STATEMENTS OF FINANCIAL POSITION DECEMBER 31, Assets Cash and cash equivalents $ 297,872 $ 624,816 Marketable securities 220,700 - Receivables 1,402 1,616 Unconditional promises to give - 4,000 Property and equipment Restricted assets Cash and cash equivalents 470, ,799 Unconditional promises to give 23,500 2,500 Mortgages receivable 208, ,438 Work in process - Preservation at Work project costs 78,979 32,135 Total assets $ 1,301,489 $ 1,299,690 Liabilities Accounts payable $ 5,231 $ 34,196 Deferred revenue 16,205 16,835 Accrued liabilities 10,726 14,729 Payable to Salt Lake City Corporation 300, ,000 Total liabilities 332, ,760 Commitments and contingencies - - Net Assets Unrestricted Board Designated Reserves Michael Mahaffey Historic Properties Program 11,377 11,377 Operations 144, ,000 Undesignated and unrestricted 332, , , ,058 Temporarily restricted 81,718 60,095 Permanently restricted 399, , , ,930 Total liabilities and net assets $ 1,301,489 $ 1,299,690 The accompanying notes are an integral part of these statements. 4

8 STATEMENTS OF ACTIVITIES Years ended December 31, Temporarily Permanently Temporarily Permanently Unrestricted Restricted Restricted Total Unrestricted Restricted Restricted Total Revenues and support Grants and contributions $ 109,602 $ 142,254 $ 90,805 $ 342,661 $ 106,688 $ 173,655 $ 1,325 $ 281,668 Donated facilities 62, ,885 62, ,706 Event income 77, ,610 87, ,763 Interest and dividend income 8, ,617 1, ,443 Unrealized gain on investments 3, ,005 Interest income on mortgages receivable 5, ,402 5, ,916 Rental revenues Memorial House 219, , , ,826 Ladies Literary Club , ,657 Memberships 13, ,230 14, ,700 Other revenue 1, ,613 1, ,070 Gain on sale of property and equipment , ,991 Net assets released from restrictions Restrictions satisfied by payments 120,631 (120,631) ,515 (217,515) - - Total revenues and support 622,567 21,623 90, , ,275 (43,860) 1, ,740 5 Expenses Program services Education and advocacy 247, , , ,668 Memorial House 205, , , ,843 Ladies Literary Club , ,498 Historic Properties Program 32, ,571 45, ,606 Support services General and administrative 147, , , ,472 Fundraising 67, ,104 73, ,015 Total expenses 699, , , ,102 Increase (decrease) in net assets (77,031) 21,623 90,805 35,397 38,173 (43,860) 1,325 (4,362) Net assets at beginning of year 565,058 60, , , , , , ,292 Net assets at end of year $ 488,027 $ 81,718 $ 399,582 $ 969,327 $ 565,058 $ 60,095 $ 308,777 $ 933,930 The accompanying notes are an integral part of these statements.

9 STATEMENTS OF CASH FLOWS Years Ended December 31, Increase (decrease) in cash and cash equivalents Cash flows from operating activities Increase (decrease) in net assets $ 35,397 $ (4,362) Adjustments to reconcile decrease in net assets to net cash used in operating activities Depreciation and amortization 171 7,312 Loss on disposal of property and equipment - (84,991) Unrealized gain on marketable securities (3,005) - Changes in operating assets and liabilities Receivables 214 2,120 Unrestricted promises to give 4,000 (4,000) Accounts payable (28,965) 27,412 Deferred revenue (630) (10,520) Accrued liabilities (4,003) (117) Use of restricted assets included in expenses Other program expenses 120, ,515 Contributions restricted for long-term purposes Cash contributions (212,059) (173,530) Net cash used in operating activities (88,249) (23,161) Cash flows from investing activities Payments received on mortgages receivable 63, ,350 Mortgages disbursed (21,000) - Preservation at work project costs paid (46,844) (32,135) Marketable securities purchased (217,695) - Proceeds from sale of property and equipment - 605,000 Other program expenses paid (120,631) (217,515) Change in assets restricted for specific programs (107,773) (34,680) Net cash provided by (used in) investing activities (450,754) 430,020 Cash flows from financing activities Collection of contributions restricted for long-term purposes 212, ,530 Net cash provided by financing activities 212, ,530 Net increase (decrease) in cash and cash equivalents (326,944) 580,389 Cash and cash equivalents at beginning of year 624,816 44,427 Cash and cash equivalents at end of year $ 297,872 $ 624,816 The accompanying notes are an integral part of these statements. 6

10 NOTES TO FINANCIAL STATEMENTS December 31, 2017 and 2016 NOTE A - SUMMARY OF ACCOUNTING POLICIES A summary of the significant accounting policies consistently applied in the preparation of the accompanying financial statements follows. History and organization activity (the Foundation) was established in 1966 to keep the past alive, not only for preservation, but to inspire and provoke a more creative present and sustainable future. The Foundation conducts public education including historic building tours, presentations and lectures, workshops, a Heritage Awards ceremony, and specific programs for school-aged children and teachers. The organization advocates for policies, practices, incentives, and making strategic personal choices to achieve its mission. The Foundation also oversees a Historic Properties Program that includes revolving loan funds, direct property protection through easements, and direct property rehabilitation. In addition, to demonstrate stewardship of historic properties, the Foundation leases the historic Memorial House in Memory Grove Park and makes it available to the public for events. During 2016, the Foundation underwent a re-branding in which it changed its legal name to Utah Heritage Foundation. Vacancies in the Board of Trustees are filled by majority vote of the remaining Board members. Every Foundation dba member is entitled to vote when a new Board member is presented. Financial statement presentation The Foundation reports information regarding its financial position and activities according to three classes of net assets: unrestricted net assets, temporarily restricted net assets, and permanently restricted net assets. Contributions Contributions are recognized when the grantor or donor makes a promise to give to the Foundation that is, in substance, unconditional. Contributions are reported as increases in temporarily or permanently restricted net assets when restrictions are imposed by grantors or donors. When a restriction expires, temporarily restricted net assets are reclassified to unrestricted net assets. Contributions that are restricted by the donor are reported as increases in unrestricted net assets if the restrictions expire in the fiscal year in which the contributions are recognized. Donations of property and equipment are recorded as support at their estimated fair value. Such donations are reported as unrestricted support unless the donor has restricted the donated asset to a specific purpose. 7

11 NOTES TO FINANCIAL STATEMENTS December 31, 2017 and 2016 NOTE A - SUMMARY OF ACCOUNTING POLICIES - CONTINUED Contributions - continued Assets donated with explicit restrictions regarding their use and contributions of cash that must be used to acquire property and equipment are reported as restricted support. Absent donor stipulations regarding how long those donated assets must be maintained, the Foundation reports expirations of donor restrictions when the donated or acquired assets are placed in service as instructed by the donor. The Foundation reclassifies temporarily restricted net assets to unrestricted net assets at that time. Contributions of donated services that create or enhance nonfinancial assets or that require specialized skills, are provided by individuals possessing those skills, and would typically need to be purchased if not provided by donation, are recorded at their fair values in the period received. Donated use of facilities are recorded as support at the fair value in the period in which it is received and the corresponding expense is recognized in the period in which the assets are used. Cash equivalents For purposes of the statement of cash flows, the Foundation considers all highly liquid investments available for current use with an initial maturity of three months or less to be cash and cash equivalents. Marketable securities Marketable securities are composed of mutual funds and are carried at fair value. Property and equipment Depreciation and amortization of property and equipment is provided by the straight-line method over estimated lives of 3 to 39 years. Maintenance and repairs which neither materially add to the value of the property nor appreciably prolong its life, are charged to expense as incurred. Estimates The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect certain reported amounts and disclosures. Accordingly, actual results could differ from those estimates. 8

12 NOTES TO FINANCIAL STATEMENTS December 31, 2017 and 2016 NOTE A - SUMMARY OF ACCOUNTING POLICIES - CONTINUED Income taxes The Foundation is exempt from federal income taxes as a non-profit organization under Section 501(c)(3) of the Internal Revenue Code and therefore has made no provision for federal income taxes in the accompanying financial statements. In addition, the Foundation has been determined by the Internal Revenue Service not to be a private foundation within the meaning of Section 509(a) of the Internal Revenue Code and qualifies for deductible contributions. There was no unrelated business income for 2017 or Currently, the tax years open and subject to examination by the Internal Revenue Service are the 2014, 2015, 2016 and 2017 tax years. However, the Foundation is not currently under audit nor has the Foundation been contacted by any jurisdiction. Mortgages, accounts receivable and unconditional promises to give Mortgages, accounts receivable and unconditional promises to give are stated at the amount management expects to collect from outstanding balances. Based on management s assessment of the credit history of those parties having outstanding balances, it has concluded that realization of losses on balances outstanding at year-end will be immaterial. Consequently no allowance is considered necessary at December 31, Interest income on mortgages receivable is recognized as it becomes due. Mortgages receivable are considered past due when payments are delinquent by 30 days. Mortgages are never placed on nonaccrual status interest continues to accrue until the obligation is met. Accounts receivable are considered past due when payments are delinquent by 60 days. Functional expenses Expenses are charged directly to program or support categories based on specific identification. Indirect expenses have been allocated based on salary expenditures. Subsequent events Management has evaluated subsequent events through April 17, 2018, the date the financial statements were available to be issued. 9

13 NOTES TO FINANCIAL STATEMENTS December 31, 2017 and 2016 NOTE B - CONCENTRATIONS OF CREDIT RISK The Foundation maintains its cash balances in two accounts with one financial institution located in Salt Lake City, Utah. These balances are insured by the Federal Deposit Insurance Corporation up to $250,000. At December 31, 2017, the Foundation s uninsured balances (including outstanding checks) totaled approximately $528,000. NOTE C MARKETABLE SECURITIES For assets and liabilities measured at fair value, the Foundation uses the following hierarchy of inputs: Level 1: Level 2: Level 3: Quoted market prices in active markets for identical assets or liabilities. Inputs other than level one inputs that are either directly or indirectly observable; Unobservable inputs developed using estimates and assumptions, which are developed by the reporting entity and reflect those assumptions that a market participant would see. Marketable securities measured at fair value at December 31, 2017 are summarized as follows: Level 1 Level 2 Level 3 Total Mutual funds $ 220,700 $ - $ - $ 220,700 NOTE D PROMISES TO GIVE Unconditional promises to give consisted of the following at December 31: Unrestricted $ - $ 4,000 Restricted for use in programs Education and Advocacy 23,500 2,500 $ 23,500 $ 6,500 Amounts due in Less than one year $ 23,500 $ 6,500 One to five years - - $ 23,500 $ 6,500 10

14 NOTES TO FINANCIAL STATEMENTS December 31, 2017 and 2016 NOTE E - PROPERTY AND EQUIPMENT Leasehold improvements, at cost $ 218,953 $ 218,953 Building and improvements, at cost or fair market value at date of donation - - Furniture and equipment, at cost 91,404 91, , ,357 Accumulated depreciation and amortization 310, ,971 $ 215 $ 386 During 2013, a historic building in Salt Lake City which had been owned by the Ladies Literary Club, was contributed to the Foundation. Personal property that was contained in the building, valued at $59,625, was also donated to the Foundation. Renovations totaling approximately $48,000 were completed in 2013, with approximately $22,000 of this total having been donated as in-kind services to the Foundation. At the time the building was donated, the Foundation s intent was to maintain the historic and architectural significance of the building while operating it as an event center, with an effort to keep rates low for non-profit and community use. Various operational factors required management of the Foundation to assess the long-term feasibility of owning and operating the building, which led to the decision to list the building for sale late in It was sold during 2016 for $600,

15 NOTES TO FINANCIAL STATEMENTS December 31, 2017 and 2016 NOTE F RESTRICTED ASSETS Restricted assets are held for the following uses at December 31, 2017: Payable to Temporarily Permanently Salt Lake Restricted Restricted City Net Assets Net Assets Corporation Total Cash and cash equivalents Education and advocacy programs $ 27,144 $ - $ - $ 27,144 Revolving loan programs 11, ,748 69, ,428 Total cash and cash equivalents 38, ,748 69, ,572 Unconditional promises to give Education and advocacy programs 23, ,500 Total uncondtional promises to give 23, ,500 Mortgages receivables Statewide loan program 20,000 36,834-56,834 Citywide loan program 151, ,415 Preservation at Work project costs ,979 78,979 Total mortgages and Preservation at Work costs 20,000 36, , ,228 $ 81,718 $ 399,582 $ 300,000 $ 781,300 12

16 NOTES TO FINANCIAL STATEMENTS December 31, 2017 and 2016 NOTE G HISTORIC PROPERTIES PROGRAM The Foundation has received grant funds from Salt Lake City Corporation (the City) totaling $300,000 for the purpose of preserving architecturally and historically significant real property. The grant funds were received on a revolving loan agreement with the City and the grant is known as the Citywide Grant. The funds are used in a revolving loan program whereby the Foundation makes low interest loans to qualifying property owners with the loan proceeds to be used for preservation and restoration of qualifying real property. The grant funds can also be used to purchase real property which would then be sold to a buyer willing to execute a preservation easement on the property. At December 31, 2017, the Foundation was using the grant funds primarily for the revolving fund loan program and did not own any property as part of this preservation program. If the grant funds are not being used as stipulated, or if the grant agreements expire or are terminated by either party, all grant funds must be returned to the City, excluding loans outstanding which would be returned to the City as amounts are received from the borrowers. Interest earned on the unused invested funds or from loans may be, and is, used by the Foundation to cover costs of administering the revolving fund loan program. The Foundation also receives contributions from individuals, corporations and foundations for use in a revolving fund loan program known as the Statewide program. All contributions and related program income from the Statewide program are retained by the Foundation. The interest from the loans in the Statewide program is available to cover administrative costs of the program and the principal is permanently restricted to be available for loans. During 2012, the Foundation received $175,000 in grant funds from Utah Transit Authority (UTA) for use in a new loan program known as the Gateway District Loan Fund. The initial use of these funds is restricted to projects within Salt Lake City s Gateway District (as defined in the grant agreement) with priority given to projects involving buildings associated with the railroad history of Salt Lake City. As loans are repaid, after the initial distribution of the funds, other projects can be considered. No loans had been made from this program as of December 31, During 2015, the Foundation established an additional revolving loan program, called the Michael Mahaffey Legacy Fund, to honor a former colleague and Foundation trustee. Donations to the fund will be permanently restricted for use in the revolving loan program. Donations totaling $108,330 had been received through December 31, The Foundation has implemented another program in collaboration with the Salt Lake City Redevelopment Agency (the RDA) called Preservation at Work in which the RDA acquires a historic property meeting certain requirements for rehabilitation and then the Foundation utilizes the project for on-site rehabilitation demonstrations. In connection with these projects, the Foundation oversees the rehabilitation of the property and funds the cost of the rehabilitation up to specified levels. 13

17 NOTES TO FINANCIAL STATEMENTS December 31, 2017 and 2016 NOTE G HISTORIC PROPERTIES PROGRAM - CONTINUED As part of the rehabilitation efforts, the Foundation can also obtain in-kind donations to provide labor and materials for the project. When the project is completed, the property is sold and from the proceeds, the RDA and the Foundation are reimbursed on a pro rata share for their capital outlay during the course of the project. Any remaining proceeds are then allocated between the RDA and the Foundation equally. The Foundation s board has designated that the proceeds received in excess of the Foundation s outlay related to the project is to be used within the revolving loan program and could fund additional Preservation at Work projects. The first property to be rehabilitated as part of this program was sold during 2015 and the Board has designated $11,377 of the proceeds from that project to be used in this manner. During 2016, another similar project was begun and as of December 31, 2017, the Foundation had incurred project costs totaling $78,979. The following summarizes the activity in the historic properties program: Mortgages Receivable Michael Preservation Mahaffey at Work Citywide Legacy Gateway Project Mortgages Statewide Fund District Costs Total Balance January 1, 2016 $ 228,155 $ 131,633 $ - $ - $ - $ 359,788 Mortgages issued Project costs paid ,135 32,135 Principal payments received (85,375) (23,975) (109,350) Balance December 31, , , , ,573 Mortgages issued 21, ,000 Project costs paid ,844 46,844 Principal payments received (12,365) (50,824) (63,189) Balance December 31, 2017 $ 151,415 $ 56,834 $ - $ - $ 78,979 $ 287,228 The payable to Salt Lake City Corporation consists of the following at December 31, 2017: Cash and cash equivalents $ 69,606 Mortgages receivable 151,415 Preservation at Work Project Costs 78,979 $ 300,000 14

18 NOTES TO FINANCIAL STATEMENTS December 31, 2017 and 2016 NOTE H COMMITMENTS In 1994, the Foundation entered into a lease agreement with Salt Lake City to lease the building owned by the City which is known as Memorial House. The original lease was amended during the year ended December 31, In lieu of rent through March 29, 2004, the Foundation was required to rehabilitate the interior of the Memorial House. This was completed at a total cost of $190,198, with the improvements reverting back to the City upon termination of the lease. Effective March 30, 2014, the City and the Foundation entered into a new agreement for the management of Memorial House. The new agreement is for an initial term of five years and may be extended by the City for five additional one-year periods. Under the new agreement, the Foundation must pay the City ten percent of the gross receipts generated by Memorial House, or $1,000 per month, whichever is greater. Under this agreement, the Foundation incurred rental expense of $22,615 during 2017 ($22,794 in 2016). NOTE I EMPLOYEE BENEFIT PLAN During 1999, the Foundation established a defined contribution salary deferral plan covering substantially all employees. Under the plan, the Foundation matches dollar for dollar each eligible employees elective deferral up to 3 percent of the employees salary. Matching contributions paid by the Foundation during 2017 were $6,260 ($6,733 in 2016). NOTE J DONATED SERVICES AND FACILITIES The Foundation receives donated services from a variety of unpaid volunteers assisting the Foundation with various programs. No amounts have been recognized in the accompanying statements of activities for these services because the criteria for recognition of such volunteer effort under generally accepted accounting principles has not been satisfied. As noted in Note H, the Foundation has entered into an agreement with Salt Lake City for the management and use of Memorial House. Annual rental expense associated with the use of this facility, based on market rates, would be approximately $85,000. The Foundation recognized the difference between the market rental rate and what was actually paid to the City as a donation and corresponding expense in the statement of activities. The total recognized for 2017 and 2016 was approximately $63,